Canada should breathe new life into the stagnating North American trading relationship by presenting the incoming Obama administration with an action plan to reduce the remaining barriers-particularly regulatory or non-tariff barriers-between the two countries, a new briefing from the Conference Board argues.

“The current economic downturn has brought international competitiveness into sharp focus. It also offers an opportunity to strengthen the integrated North American economic partnership,” says Glen Hodgson, senior vp and chief economist.

“Canada would advance its economic interests through refinements in trade policy, both unilaterally and in concert with the U.S. And renewal of trade arrangements with Canada-still America’s largest trading partner-should be high on the Obama Administration’s priority list.”

Canada-U.S. economic relations need to ensure that the trade policy architecture reflects the integrated business reality in North America. Continental trade has stagnated since 2000 when measured in real terms, and the North American Free Trade Agreement is fully implemented. The two parties should agree that non-tariff barriers are a key factor in the plateauing in North American trade volumes. Rather than seeking full harmonization, mutual recognition of each others’ regulations may be the most concrete way to make real progress on non-tariff barriers with the United States.

The report also outlines how the international competitive position of Canadian firms could be improved if Canada took unilateral action in six areas that don’t require negotiating with the United States.

IE